Agriculture stays the spine of the Indian financial system, however sensible and sustainable farming is just not precisely our forte. Many years in the past, one may need come throughout a household or two in each village who might precisely predict the climate, irrigation necessities or the crop yield, however that historic information had slowly died out. Nonetheless, tech-driven and environmentally sound precision agriculture has taken its place globally, promising most productiveness, minimal variables threat (learn unfavourable climate circumstances and fast-falling soil fertility) and minimal environmental influence.
Because the title suggests, this new follow requires a scientific method, meticulous planning and administration based mostly on humongous agri knowledge and computerised equipment to present easy farming a futuristic flavour. Add satellite tv for pc imagery, drones and different IoT (Web of Issues) units to the combination, and one would witness near-automated agriculture throughout wired villages. However how inexpensive will or not it’s for India’s small and marginal farmers who domesticate solely small patches of land (0-2 hectares) and have little or no entry to formal credit score?
Agritech startups on this house might be in the same plight. Their providers are different and thrilling – be it predicting the correct quantity of water for various fields or totally different components of the identical subject, checking moisture ranges or analysing micro-climate, soil situation or the harm attributable to pests. And very similar to the developed world, fairly a couple of precision farming startups in India are leveraging sensors and drones, utilizing laptop imaginative and prescient and satellite tv for pc imagery, and making good of synthetic intelligence (AI), machine studying (ML), deep studying algorithms and automation to assist enhance crop productiveness and farming course of effectivity. However how sustainable are they?
Fortunately, not many of those startup founders are daunted by the gloomy prediction that India remains to be not prepared for scientific farming. Even on the outset, these high-end applied sciences appear to convey hope that they’ll make farmers extra environment friendly and scale back prices. As an illustration, they declare that water utilization might be introduced down by 40-50% utilizing the right knowledge. “Our customers have seen a 40% enhance in yield, with a 20% decrease value of manufacturing,” says Siddharth Dialani, cofounder of BharatAgri. The Pune-based startup gives customised weather-based advisory for 30-plus crops in three languages by way of real-time satellite tv for pc monitoring.
However the query stays: Can farmers afford these applied sciences? Can startups overcome the price barrier to realize scale?
Precision Farming Targets: Affordability For Farmers, Scalability For Startups
One of many the reason why precision farming has labored effectively for a lot of developed nations is the scale of the land owned by the vast majority of the farmers and the revenue they’ve. As an illustration, the common farm measurement within the US was 443 acres in 2018, up by two acres from the earlier yr, whereas the common revenue of an American farmer was round $11.21 per hour.
Then again, the variety of smallholdings is steadily rising in India, however medium and enormous holdings are coming down yearly as a result of fragmentation of agricultural land. In keeping with the agricultural census report launched in 2018, the common measurement of the Indian farmland shrank by greater than 6% between 2010-11 and 2015-16, and the share of small and marginal holdings elevated to 86.21% of whole operational holdings in 2015-16 as towards 84.97% in 2010-11.
Precision farming instruments will not be low cost, both. An excellent climate sensor prices wherever between $1,500 and $2,000 whereas an entry-level yield monitoring tools prices round $2,000. Every atmosphere knowledge gadget can gather enter for round 100 acres of land, and a soil moisture sensor can cowl a most of two-three acres. Even indigenous units will value wherever between $300 and $1,000. Plus, there might be a SaaS (software program as a Service) value, which is usually subscription-based, to avail these providers. Within the US, $80-90 is charged yearly per farmer per acre. However smallholder farmers, the vast majority of whom are working at losses, can hardly afford this sort of know-how.
“Sensors are utilized in developed nations because the farm areas there cowl 1,000 acres or extra. No one can bodily stroll and monitor that space. However in India, farmers can stroll throughout their farms and verify soil well being and some different parameters. So, they don’t need to shell out the cash for these instruments,” says Krishna Kumar, cofounder of CropIn.
As an alternative of catering on to the farmers, the Bengaluru-based startup operates within the B2B house. It makes use of satellite tv for pc photos, AI and ML to observe crop well being remotely, makes yield predictions and passes on the insights to Indian agri business, farming firms, monetary establishments and policymakers. The corporate additionally serves greater than 100 farm companies in 52 nations.
In keeping with Kumar, working within the B2C house and catering to farmers might be tough for startups in the event that they need to obtain scale. “If your online business mannequin depends upon farmers from whom it’s important to gather your income, it is going to be robust. The success of precision farming depends upon which markets you might be working in and the farmers you might be focusing on. If you’re focusing on a farmer with an acre of land, his return on funding (RoI) is probably not nice instantly even when he agrees to spend money on sensors. The B2C mannequin may go in case you are focusing on giant farmers,” he notes. Subsequently, startups on this house must scale and solely then can supply such instruments to many farmers at a time.
One other situation is the time taken to see the end result. “Earlier than choosing any change within the ongoing follow, a farmer has to see an instantaneous profit in it. He won’t anticipate two-three harvest cycles (usually what it takes for precision farming to ship outcomes) to see what he positive factors. Farmers in the present day are keen to pay for tech, however they want a strong proposition. They won’t pay $80-90 subscription for units and wait for a very long time to see the worth,” says Hemendra Mathur, enterprise companion at Bharat Innovation Fund.
Though precision farming can resolve a number of challenges reminiscent of pest assault or post-harvest losses, the farming group is just not fairly comfy with these hi-tech instruments. Convincing them about shared use and the preliminary value may be tough. Every climate monitoring sensor can cowl 100 acres of land, which suggests round 50 farmers might apply it to a sharing foundation. However bringing them collectively and serving to them perceive the number of knowledge these units can seize and supply won’t be a straightforward activity.
“Our farmers certainly want precision farming. Nonetheless, their farm measurement is so small that startups can’t cater to them individually. Other than {hardware} and software program, firms should bear the coaching value as effectively,” says Ankur Bansal, cofounder and director of BlackSoil. The VC agency is carefully watching the agritech house in India and should make investments quickly.
Because of these challenges, most precision farming startups reminiscent of CropIn and StellApps are working within the B2B house and have managed to scale. Investments have additionally poured in. Bengaluru-based CropIn has already raised $12 Mn, together with a Collection B funding of $eight Mn in November 2018. The spherical was led by Chiratae Ventures and likewise noticed participation from the Strategic Funding Fund (London and Seattle) run by Invoice & Melinda Gates Basis.
For many others, it’s both bundled providers, that means catering to each farmers (B2C) and companies (B2C) or promoting these instruments to horticulture farmers, who’re the low-hanging fruit, as they’ve greater than 10 acres of land on a mean.
Bundled Companies, Massive Farmers Maintain Unit Economics Going
As medium and enormous farmers rising high-value crops have larger buying energy, they’re extra open to attempting out these precision instruments. As an illustration, Omnivore-backed Fasal provides an AI-powered IoT-SaaS platform for horticulture farmers that captures real-time knowledge on rising circumstances from on-farm sensors and delivers farm- and crop-specific actionable advisories to farmers (by way of cell) in vernacular languages.
“Horticulture is a greater possibility on the subject of income. The phase is rising yearly, and we need to be on this house for the following three-five years. Furthermore, the client acquisition value (CAC) is low, and the unit economics is best as folks right here can simply see the worth proposition. As for different crops, we want to go in sometime, however possibly with totally different economics,” says Ananda Prakash Verma, cofounder and CEO of Fasal. The startup is catering to greater than 2,000 farmers in Maharashtra, Karnataka, Chhattisgarh, Madhya Pradesh and a few components in Telangana.
Based in 2018, Fasal has additionally developed a B2B2F (business-to-business-to-farmer) mannequin and gives knowledge to Mahindra Agri, SAgri and some different firms.
“Though we work straight with farmers, going by aggregators is less complicated and extra scalable,” says Verma. The corporate doesn’t have a excessive revenue margin from the {hardware} a part of the enterprise however makes up for it from software program subscriptions. “As we scale, we get higher margins. That’s the means now we have structured our enterprise,” he provides.
The IoT {hardware} utilized by the startup prices INR 20Okay or extra, which is a one-time funding, whereas Fasal prices a buyer INR 500-700 a month, relying on the service bouquet. The startup additionally claims that the {hardware} it has developed in-house is round 25% lower than than the imported instruments.
Sudhanshu Rai, the cofounder of Fyllo, concurs, saying that the units would value loads much less if they’re made regionally. “We offer software program to firms and likewise cater to farmers. And we consider that farmers pays once they see the worth. They’ve all the time paid the fertiliser firms as their merchandise introduced worth. It will likely be the identical with precision farming.”
Primarily based in Bengaluru, Fyllo is an IoT and AI-based precision agriculture providers firm. It provides two varieties of IoT units, an environmental-cum-soil sensor priced at INR 45Okay and a soil sensor that prices INR 25Okay. The startup claims that the information offered by its {hardware} and software program has helped farmers increase the standard of their produce by 82% in a single yr. Regardless of lockdown restrictions and different challenges, the corporate is now catering to 500 farmers in comparison with simply 20 prospects in 2019, and the CAC stands at INR 1200.
BharatAgri, a Pune-based startup providing bundled providers, can also be rising at 40% month on month. The corporate sells advisory subscriptions to farmers for a hard and fast half-yearly charge of INR 599 an acre. It caters to greater than 4 lakh farmers and works with greater than 12 manufacturers, serving to the latter market their merchandise amongst BharatAgri’s premium farmers. These vary from important inputs reminiscent of seed and fertiliser to monetary merchandise like crop and climate insurance coverage.
Yield management and well timed market entry may deal with the double constraints of value and waste. Vivek Rajkumar, the founding father of Aibono, explains how the Bengaluru-based startup is doing it. “We function within the perishables class, and if there’s a mismatch between demand and provide, the produce goes to waste as small farmers would not have storage services. Furthermore, matching demand and provide can’t be accomplished after the harvest. So, our work begins 90 days earlier than the harvest. We give them the proper variety of seedlings, which ought to be sown in sync with finish consumption.”
Aibono not solely provides yield and supply-demand sync utilizing knowledge analytics but in addition ensures 100% procurement. Plus, it connects the farmers to retailers in order that they don’t have to pay for the information and the seeds upfront. All prices and repair charges are subtracted by the platform when the produce is procured and paid for.
Startups See Progress In World Markets, Traceability Options
Enterprise capitalists suppose that going forward, India would be the testing floor for precision farming ideas. However the world demand will all the time be there, and a lot of the prospects will come from different nations.
“We’re creating a whole lot of options for smallholder farmers. In India, now we have 120 Mn of them, however globally, there are 500 Mn. That could be a giant quantity and an enormous market. Apart from the US, a number of nations reminiscent of Kenya and China have smallholder farmers who would wish digital options. As an investor, I’d be eager to have a look at a world thesis. I see this rising,” says Mathur of Bharat Innovation Fund.
A have a look at the startups’ clientele appears to justify this pattern. CropIn has already expanded to 52 nations in South-East Asia, Europe and Africa, and will get 50% of its total income from world play. Ankur Capital-backed Agricx, which provides AI and ML-based SaaS options to simplify the crop grading system and eradicate variability from the produce high quality, has expanded to Europe and Turkey. StellApps, which gives a set of functions to dairy co-operatives, farmer producer organisations and personal dairies, has a subsidiary in Normandy, France, and principally sells its chilly chain monitoring answer within the French market.
In addition to, meals security and meals traceability are anticipated to be on the core of the availability chain. So, there might be the next demand for distant monitoring instruments and drones, supplied by the information startups. “Tech literacy will enhance amongst finish shoppers within the home market. How effectively the shoppers can observe the meals supply – the farm/s from the place vegetables and fruit have been procured – will convey within the differentiation for startups,” says Kumar of CropIn.
Can Startups Create Affordability For Small Farmers Utilizing Tech?
Regardless of the rising adoption, monetising precision farming is probably not simple in India, say consultants. “I feel precision farming remains to be in its infancy right here and extra appreciated by bigger/high-value farmers and corporates (wineries, for instance). It might slowly trickle down as a follow when the mass attraction round it grows,” says Deepak Gupta, founding companion at WEH Ventures.
However within the preliminary section of the go-to-market, it could contain consultative promoting and handholding, which can work higher in an aggregated method or for big-ticket gross sales, he provides.
“Additionally, because it usually entails {hardware} (with some amortised funds), assortment generally is a huge situation when coping with very atomised farmers. Therefore, coping with companies or a collective base of farmers could also be extra sensible,” says Gupta.
Consultants, nonetheless, suppose that the B2C method will ultimately assist obtain the actual scale in agritech. And it’ll basically contain small farmers who personal 86.21% of whole operational holdings. “B2B is only a means to offer higher providers to farmers. However it undoubtedly helps in rising the ARPU (common income per person) and bettering unit economics,” says Dialani of BharatAgri.
As farmers had little assist or hand-holding over time, they’ve grow to be risk-averse to interventions and advisories, that are a departure from conventional practices. These additionally include a price element, which might be past the attain of most farming communities.
“The problem, due to this fact, is to attempt for funding in know-how functions that will catalyse higher insights and ultimately create affordability throughout spectrums. In essence, the best way out might be to develop a center path between B2B and B2C/B2F. It will likely be sustainable if consumers (farmers) and sellers (inputs suppliers) can thrash out an settlement of cost-sharing. The center path might be attained if consumers get inexpensive pricing for transitioning to excessive influence insights/inputs for crop interventions. Sellers may take up the value shortfall in the event that they get unique knowledge rights for fine-tuned and calibrated technological interventions,” sums up Taranjeet Singh Bhamra, cofounder of AgNext.
